Attorney Position on Resolution to Restrict the Use of Public Money for Development on the Ensor Property

From our city attorney to council.

Council,

Michael told me there had been a question regarding the sales tax increment and asked me to follow up with outside counsel to clarify the council’s role in transferring the sales tax increment from the City to LIFT.  I have done so and Corey Hoffman’s response is below.
Please let this email clarify our conversation regarding the implementation of sales tax increment previously approved in an urban renewal plan. 
 
Using the Santa Fe Urban Renewal Plan as an example, Section 7.3 authorizes property and sales tax increment, and as it relates to sales tax increment, Section 7.3.2 defines the base amount of municipal sales tax.    
 
For purposes of property tax, the county treasurer pursuant to C.R.S. § 31-25-107(9) pays property tax increment directly into the “special fund” of the urban renewal authority.  Thus, upon the approval of property tax increment, the increment is transmitted to the special fund without any further action of the City (by the county treasurer). 
 
However, as it relates to municipal sales tax increment, while the sale tax increment is specifically authorized by C.R.S. § 31-25-107(9), the mechanism for collection and transfer is not included in the statute.  In other words, it refers to municipal sales tax collection and requires payments of sales tax increment into the special fund, but does not describe how the disbursement is made.  Thus, in order to implement the sales tax component of an urban renewal undertaking or activity, the City and LIFT would need to both approve an Intergovernmental Cooperation Agreement that requires collection of the sales tax and transfer of the sales tax increment into the special fund.  I have pasted sample language below (taken from another jurisdiction).
 
                “The City agrees to assist the Authority by pursuing all lawful procedures and remedies available to it to collect and transfer to the Authority on a timely basis all Pledged Sales Tax Increment Revenues for deposit into the Project Account of the Special Fund.  The City agrees that so long as the Note remains outstanding, that by the last business day of each month that it will remit to the Authority for deposit into the Project Account of the Special Fund all Pledged Sales Tax Increment Revenues collected by the City in such month.
 
                To the extent lawfully possible, the City will take no action that would have the effect of reducing tax collections that constitute Pledged Tax Increment Revenues.”
 
It is my understanding that bond attorneys would insist on such a cooperation agreement to confirm the collection and transfer of sales tax increment by the City to the special fund to secure any indebtedness.
Please let me know if you have any questions.

Kristin Schledorn
City Attorney

2255 West Berry Avenue
Littleton, Colorado 80120
(303) 795-3725  

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One Response

  1. Interesting… so the attorney knows the rules but doesn’t insist that the city comply? Will be interesting to see if she does at some point.

    On Sat, Jan 16, 2016 at 4:53 PM, Citizens View of Littleton Colorado wrote:

    > Carol B posted: “From our city attorney to council. Council, Michael told > me there had been a question regarding the sales tax increment and asked me > to follow up with outside counsel to clarify the council’s role in > transferring the sales tax increment from the City to” >

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